President Obama's two minds on the deficit
By: Glenn Thrush and Carrie Budoff Brown and David Nather April 12, 2011 04:37 AM EDT

When it comes to deficit reduction and entitlement reform, President Barack Obama has been a master of mixed signals.

As a candidate, Obama promised to deal with the exploding deficit — so committed to tackling the underlying issue of entitlement reform that he told The Washington Post he’d make the “hard decisions … under my watch” shortly before his inauguration almost 27 months ago.

But as president, such high-minded goals have run headlong into a tanking economy and more mundane political imperatives, like positioning himself for his 2012 reelection campaign.

He set up a blue-ribbon deficit commission last year — even promised its report wouldn’t gather dust on the shelves — then promptly distanced himself from it. His State of the Union speech mentioned debt reduction, but focused on stimulating job growth and funneling new funding to education, infrastructure development and green energy projects. And he adopted a political strategy that seemed to be based on Republicans making the first move on presenting a plan for the deficit.

That’s all changed. Last week’s release of Republican Rep. Paul Ryan’s controversial plan to privatize Medicare and a looming vote to raise the debt limit has forced the White House to unveil its own plan in a speech planned for George Washington University Wednesday afternoon.

“The goal here,” said a senior Democratic operative, speaking of Obama’s address, “is to start dealing with the entitlement crisis, and get credit for doing so, without getting ripped apart like Paul Ryan has.”
White House aides say Obama genuinely cares about the deficit: “The president, through his actions both in the first two years in office … has shown that he is committed to deficit reduction,” White House press secretary Jay Carney said on Monday, citing Medicare and Medicaid savings in Obama’s health reform law.

Until recently, however, Obama had been comfortable letting House Republicans and a bipartisan group of six senators take the lead on entitlement reform, recognizing that any misstep could be cast as an attack on the cherished Medicare and Social Security benefits to middle-income seniors — a potential political disaster.

But the GOP has succeeded in focusing the debate, at least in Washington, on deficit reduction; And House Speaker John Boehner (R-Ohio), fresh off of extracting $38.5 billion in cuts from the 2011 budget, has promised to make approval of a hike in the national debt ceiling conditional on new cuts.

A senior administration official told POLITICO that Obama’s speech would break new ground, and not simply serve as a forum for Obama to restate his previous arguments for addressing the deficit.
But the expectations aren’t high for a highly specific proposal, likely to be more a white paper than a spreadsheet.

The Ryan budget cuts $6 trillion in spending over 10 years, while the bipartisan Senate group is aiming to trim the deficit by $4 trillion — goals that the president will be pressed to match, or risk looking like he isn’t serious, experts said.

“It is going to be very difficult to hit that number without alienating key supporters in a big way,” said the administration official, referring to senior citizens and labor. “There are real consequences to Social Security and Medicare to get savings that way.”
On the flip side: Hill Democrats are wary of any proposal that Republicans could remotely spin as a tax increase.

The issue of raising the debt ceiling, with the national credit limit due to be reached sometime next month, is inextricably linked to the larger issue of deficit reduction and entitlement reform — and House GOP leaders have vowed to make the upcoming debate a referendum on long-term deficit reduction.

It would have been hard for the White House to dodge the issue altogether, given the steady drumbeat of criticism that Obama has failed to lead. But he also has to live down, or up to, his own previous statements.

In 2006, then-Sen. Obama cast a “no” vote on extending the debt ceiling to signal his seriousness about addressing runaway entitlement and military spending — along with tax breaks for the wealthy — problems he’s long identified as the country’s principal fiscal ills.

On Monday, Carney said Obama now views that as a “mistake,” and cast an apocalyptic picture if the upcoming vote, which will likely take place next month, failed.

Bob Bixby, executive director of the Concord Coalition and a member of the Bipartisan Policy Center’s debt reduction task force, said, “I don’t expect anything with a whole lot of detail,” calling the Wednesday speech, “another step in the dance … an attempt by the president to get out in front of the debate because the only marker down there is Ryan,” Bixby said.

White House officials were tight-lipped about specifics, but experts say the proposal is almost certain to focus on using key elements of his health reform law to cut costs for Medicare and Medicaid, drawing the contrast with Ryan’s plan to replace public programs with private vouchers.

Obama also is expected to target wasteful health care spending, redundancies and fraud, a mainstay of all reform plans for years.

“I think the president is going to try to focus on what’s a responsible way to do it and what’s not a responsible way,” said Ron Pollack, executive director of Families USA, a health care advocacy group that was a close ally of the administration during the health care reform debate. “I don’t think that Wednesday is going to be an a la carte menu of the 37 things we could do. That’s not the way the president works.”

Pollack, who talks often to White House officials but wouldn’t say whether he had discussed the speech with them, said “there may be a few examples” to illustrate ways to bring down Medicare and Medicaid spending beyond the initiatives already in the health care law. But “a deficit plan would be a lengthy document,” he said, and “I really think this is going to be about the general approach.”

On Sunday, White House senior adviser David Plouffe offered a general blueprint for Obama’s plan that aligned his push for fiscal austerity with more traditional Democratic campaign themes.

Plouffe said Obama’s plan would include entitlement fixes that would use a “scalpel, not a machete” and said Obama would reiterate his call for rolling back tax cuts on families earning more than $250,000 a year, a key component of last December’s bipartisan deal.

“Seniors, the poor, the middle class, in the congressional Republican plan, are asked to bear most of the burden,” Plouffe said on CNN’s “State of the Union.”

“If you weren’t giving enormous tax cuts to millionaires, you wouldn’t have to do that.”

Still, some outside groups have become nervous about whether Obama will put more damaging cuts on the table, especially after reaching a budget agreement with Republicans that some Democrats have criticized for containing too many spending reductions.

One concern, for example, is that Obama could agree to work with Republicans to repeal the health care law’s maintenance-of-effort requirements for their Medicaid programs, which prevent them from trimming benefits between now and the program’s expansion in 2014.

“You can’t cut Medicaid any more. There’s nothing you can do at the federal level. All the levers are at the state level,” said Bruce Lesley, president of First Focus, a bipartisan organization that focuses on children’s issues.

Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities, said several administration officials have already made comments suggesting President Obama would never agree to turn Medicaid into block grants, as the Ryan plan would do.

“We’d certainly expect and hope that the administration would oppose these fundamental changes” to Medicare and Medicaid in the Ryan plan, Park said.